Trump says US, EU must cut all tariffs ahead of key talks

By BLOOMBERG

BRUSSELS • President Donald Trump said that the US and the European Union (EU) should drop all tariffs, barriers and subsidies, with the bloc’s trade chiefs set to present him with proposals in that direction in a crunch meeting at the White House later yesterday.

“I have an idea for them. Both the US and the EU drop all Tariffs, Barriers and Subsidies!” Trump said in a Tuesday night tweet. “That would finally be called Free Market and Fair Trade! Hope they do it, we are ready — but they won’t!”

European Commission President Jean-Claude Juncker and EU Trade Commissioner Cecilia Malmstrom were to meet with Trump in Washington yesterday. They plan to signal the bloc’s willingness to negotiate a bilateral trade agreement on manufactured goods, or a so-called plurilateral sectoral agreement between all major car exporters which would cut or eliminate tariffs on automobiles globally.

The overtures are a lastditch attempt to persuade him from imposing tariffs on European car exports to the US, in what could deal a serious blow to the 28-nation bloc’s economy. The Stoxx 600 Automobiles & Parts Index fell by 0.6% at 11am in Brussels yesterday ahead of the meeting.

“We are here to explain and find out how to prevent a trade war,” Juncker said in an interview with German public broadcaster ZDF before the meeting, adding that he’s not overly optimistic. The EU is prepared to retaliate “immediately” if talks fail, he warned.

The commission, which manages trade relations on behalf of all 28 nations in the EU, is preparing a list of retaliatory measures on American goods worth US$20 billion (RM81.2 billion) should the US impose car tariffs, Malmstrom said. “It would be more general, like farming goods, machines, high-technology products and others,” she said in an interview with Swedish newspaper Dagens Nyheter.

Highlighting the complexity of yesterday’s talks, hours before Trump called for the elimination of all tariffs, he had tweeted that “tariffs are the greatest”. He has also singled out the EU as a “foe” of the US because of its trade surplus, and hinted that America’s commitment to the continent’s security is contingent on resolving the spat over tariffs.

The euro and shares in European auto exporters could drop if the Washington talks result in “further escalation of the US-EU trade tensions, with Trump sticking to his threat of additional tariffs on EU car exports and the EC’s Junker threatening to retaliate,” Credit Agricole analysts led by Valentin Marinov said in a note. Analysts caution that worse may be yet to come. Trump’s announcement of plans to provide US$12 billion in aid for US farmers suffering from tariffs suggest that “Trump is preparing for the long haul,” said Martin van Vliet and Benjamin Schroeder of ING Bank NV in Amsterdam.

“With Trump having called the EU a ‘foe’ recently and his assertion that he was ‘playing with the bank’s money,’ any quick resolution in this high stakes standoff would come as a surprise,” they said.